5 Telltale Signs A Startup Is Completely Worthless

February 21, 2014 / Comments Off on 5 Telltale Signs A Startup Is Completely Worthless

Our emerging tech-culture today is awash with startups. Some are really exciting and are laying the foundation for the next generations. Others…not so much. In fact, the lion’s share are downright worthless for a variety of reasons. That’s okay! That’s how the digital ecosystem works.

The truth is that everyone is a potential startup waiting to happen. Anyone can come up with a fabulous idea, but what matters is their ability to attract the right team and bring the company to market correctly. When does a startup graduate to the next level? No one really knows. To be labeled as a savvy new startup is such a good thing no one wants to let go of the title!

Regardless, let’s take a look at 5 telltale signs that a startup is completely and utterly worthless…most likely.

Sign #1: It’s Propped Up with Cheap Labor

Small budgets are to be expected until a company gets to the point where it attracts VC investment or substantial crowdfunding. A wise startup allocates what capital there is by investing in a smaller amount of highly qualified contractors rather than looking for the cheapest labor possible.

There IS money in 99% of the startups out there. Unless it’s a one-man-band outfit that can do literally everything, or it’s an automated minimal viable product, things like web design, graphic design, content creation/publishing and marketing cost money in one way or another. The question is whether it’s being spent on “quality” or vast amounts of subpar “quantity” work.

Sign #2: Social Media Presence is Fiction

An easy example is common cheap and dirty social media marketing methods. They spend capital on Facebook likes, Twitter followers, YouTube views, shares and the like.

Almost the entirety of their real social media presence is a work of fiction, where there is little to no actual engagement taking place. It’s all hype! It’s a mirage. 80% of the so-called “activity” is done by cheap online contractors getting paid $1 per 1000 clicks, shares, etc.

Sign #3: Capital Reinvestment is Backwards

If ROI isn’t going towards making the product/service better for the customer, and instead being lavished on more cheap marketing tactics to sustain the fabrication of social proof, there’s a problem. That’s unsustainable. Profits needs to go into creating a better platform; towards higher quality contractors/agencies, better design/usability, better content, etc.

Startups should care about organic and natural growth/expansion and community building. In-pocket profit isn’t what successful startup-ing is all about.

Sign #4: Dependent on Outbound Marketing

Most doomed startups spend their cash on outbound marketing because they’ve got a weak product, a sloppy platform and no inbound appeal. If 90% of their clients/customers are having to be sought out of pitched out, that’s a problem. It’s all about inbound streams of traffic, leads, activity, interest, clients, etc.

The more inbound there is, the better. Of course some outbound marketing isn’t a bad idea. Sometimes paid advertising helps and can work wonders. But, if they’re 2+ years into it and still have little to no inbound, it’s probably a bad sign. An easy fix would be to hire an MBA with experience in inbound or content marketing.

Sign #5: Beta? WTF is A/B Testing?

Oh boy! Almost no one hits a homerun the first time they get up to bat. And, no batter steps up to the plate in a game that’s never swung a bat before. You can’t even get on the game roster without at least showing up to practice. Get it?

If there’s no testing/tweaking going on and no plan for a beta release to gather analytics and move forward strategically, chances are it’s a worthless startup trying to get to market as quickly and chaotically as possible.